If the Debt Ceiling Isn’t Raised, Will Your Social Security Check Be Late?

The White House is reflected against a social security card.
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It’s like a law of nature: When you’re of retirement age, your Social Security check comes every single month at the same time of the month, like clockwork. You can count on it.

But now lawmakers in Washington, D.C., are having a big fight over something called the debt ceiling. If the U.S. government hits the debt ceiling, which could happen as early as June 1, that means the government goes into default and won’t be able to pay all its bills.

If that happens, will your Social Security check still arrive on time?

The answer is “Probably, but who knows for how long?”

We’ll explain.

A Really Short Bit About the Debt Ceiling

The debt ceiling is a law that sets the maximum amount the federal government can borrow. Lawmakers periodically have to raise the ceiling because if the government goes into default, it could have devastating economic consequences and trigger a recession.

There’s a whole big political fight going on over this right now, but this isn’t a political website. It’s a financial news and advice website, so we don’t really want to get deep into the political weeds. Let’s just say standoffs over this have happened in the past, but last-minute deals were struck.

Signs That Your Social Security Check Might Be Late

In a speech last month, U.S. Treasury Secretary Janet Yellen said if the country defaults on its debt, “it is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security.”

That sounds pretty grim!

But back when a debt ceiling standoff happened in 2011, the Treasury Department came up with a way to avoid defaulting on its debt. How? Rather than picking and choosing who gets paid and who doesn’t, Treasury waited until it had enough money to cover all its obligations in a given day.

In other words, everybody gets paid late, including people on Social Security.

Signs That Your Social Security Check Will Arrive on Time

Despite all that doom and gloom, it sounds like most political insiders in Washington, D.C., are confident that lawmakers will somehow reach a deal.

“Historically, every time the two parties have debated a remedy right up to the deadline, they struck a last-minute bipartisan deal to head off economic havoc as Wall Street investors grew increasingly skittish,” Politico reported.

And if there’s no deal, political observers predict that the government will somehow get Social Security checks out on time, even if the debt ceiling is breached.

How? Probably by tapping into the Social Security trust fund, which gets its money from payroll taxes and which funds retirement benefits. And because older Americans are historically the country’s biggest voting bloc, neither Congress nor the White House wants to make retirees mad.

In fact, a 1996 law includes an “escape clause” from the debt limit that would allow the government to keep paying Social Security and Medicare payments by drawing down the Social Security and Medicare trust funds, says Steve Robinson, chief economist for the bipartisan Concord Coalition.

And since the Social Security trust fund won’t go broke for at least another decade, it could fund plenty of Social Security payments in the meantime.

That just leaves everyone else to get paid late — like government employees, VA doctors and the military.

Most Retirees Rely on Social Security

In any case, let’s hope our political leaders hammer out an agreement that’ll keep those Social Security checks coming. People really count on them.

Almost two-thirds of Social Security beneficiaries depend on the checks for half of their income, and 40% of them rely on the checks for 90% or more of their income. That’s according to the National Committee to Preserve Social Security and Medicare, which is urging Congress to lift the debt ceiling.

If you’re among the millions of Americans who rely on Social Security benefits, now would be a good time to add a little cushion to your bank account, just in case you need extra cash until your check arrives. We have suggestions for starting an emergency fund, being frugal in retirement and making money from home as a retiree. If you’re in more urgent need, also consider cutting back to a bare-bones budget and reaching out to one of these services that assist with essential needs.

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.